OUR THOUGHTS ON:

Tax Exempt Advisory Committee Weighs In on Current Issues

Higher Education|Internal Revenue Service|Not-for-Profit|Tax

By Michael Vizzini

The Advisory Committee on Tax Exempt and Government Entities (ACT) fosters public discussion of issues relevant to tax-exempt and government entities, and presents in an organized and constructive fashion the interested public’s observations surrounding current or proposed entity programs, while also suggesting improvements. The following are propositions made by the ACT as part of its 2018 Report of Recommendations, released June 7.

In July 2015, the IRS announced the end of the staggered five-year remedial amendment cycle system for determination letters issued to individually designed employee plans. As of January 31, 2017, this cycle system came to an end, but determination letters are still granted upon initial qualification or termination of a plan. The ACT recommends reinstitution of this amendment cycle on a limited basis and enumerates 12 circumstances wherein the IRS should consider allowing applications for determination letters. See Publication 4344 (Rev. 6-2018) for more information.

The Employee Plans Subgroup of the ACT also examined compliance concerns for tax-qualified retirement plans with respect to participants and beneficiaries who are missing or are otherwise not responsive (considered “missing participants”). In order to deal with the complex issues facing plan sponsors who seek to make distributions from employee plans, the ACT recommends several changes that would modify existing guidance and provide new guidance on certain IRS Forms and their accompanying instructions, while issuing new Field Directives. See Publication 4344 (Rev. 6-2018) for more information.

The ACT also provides recommendations with respect to incentivizing the universal e-filing of Form 990. For fiscal year 2017, roughly 57 percent of all Forms 990 and 990-EZ were filed electronically. Currently, only the smallest exempt organizations filing Form 990-N and the largest organizations filing at least 250 returns in a calendar year and/or with assets exceeding $10 million are required to e-file Forms 990 and 990-EZ. The ACT recommends a mandatory electronic filing law for all exempt organization returns, noting that there appears to be overwhelming support for the action and that prioritizing the development of online accounts for exempt organizations would help expedite the process.

Finally, the ACT also provides recommendations encouraging self-compliance by issuers of tax-advantaged obligations/tax exempt bonds, and recommendations regarding sharing of taxpayer information with tribal government tax programs. Please see Publication 4344 (Rev. 6-2018) or contact a member of the Schneider Downs tax department if you have further questions.

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